What is Replacement Cost Coverage?

If you’ve ever purchased a homeowners insurance policy, you’ve probably heard two terms: replacement cost coverage and actual cost value. But what do these terms mean and why is having replacement cost coverage a better idea?

What is Replacement Cost Coverage
Replacement cost coverage refers to the actual cost to rebuild your home and replace all of your belongings in today’s modern era. This means that if there is a catastrophic fire or other natural disaster that damages your home, your insurance company will pay to replace your structure and belongings at today’s rates without considering deprecation. They will also pay to replace your belongings, no matter how old they are.

Modern Building Technologies
If you own an older home, replacement cost coverage is a great idea. This means that your home will be rebuilt after a catastrophic loss with modern building technologies. Often, this means greater energy efficiency and safety protocols that were not available when your home was originally built.

What is Actual Cost Value on a Homeowners Insurance Policy?
Now that you fully understand what replacement cost is, it is important to understand what actual cost value means. Actual cost value is the opposite of replacement cost. Instead of replacing your 1990’s television with one from the modern era, you would be given an amount in the value of your television the moment your loss occurred; a figure considerably less that probably wouldn’t allow you to replace it.

NOTE: Most insurance carriers do not offer replacement cost coverage on certain pieces of jewelry, antiques, firearms, and other specialty items. Please check with your agent to determine what your policy actually covers.

As you can tell, opting for replacement cost value on your homeowner’s insurance policy is a wise idea. For more information, please contact your local Little Falls insurance agent at Hannekan Insurance Agency.

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Taking Stock: How a Home Inventory Can Protect You

For all of us who play, work, or live in the Little Falls, MN area, it is a good idea to take stock once in a while. It is beneficial to reflect on our health, our fitness, and our finances. It is also important to take stock of what we own. No, it’s not because possessions are so important, but because taking stock provides valuable information.

When we take inventory of our personal possessions, it accomplishes at least two important things. It gives a sense of how much it would cost to replace what we have accumulated, and it better protects our ability to document replacements in such a loss.

When you begin to add up what it would cost to replace every pair of shoes, each item of furniture, your collectibles, clothing, appliances and other possessions, you may realize you do not have enough protection when it comes to the “contents” portion of your homeowners insurance. Even if you do, an inventory can provide evidence of what you claim in a loss.

In a perfect world, you would have receipts for everything you have purchased. Reality is, you probably don’t. But by going through your home and taking inventory, even using your best recollections, can be helpful. In addition, a video of each room and closet of your home can also provide documentation.

If you decide to document items, go room by room. It is a process that could take days. But it is a process that can pay big dividends in a claim.

If you are unsure of your coverage, contact us at Hanneken Insurance Agency. We are an independent insurance agency serving the Little Falls area. We can review your policy to assure you of your current coverage. If you need more coverage, we can get you quotes. In fact, you can get a homeowner’s insurance quote online from our website.

It might be time for you to take stock and conduct a home inventory. Then make sure you have the needed coverage by contacting Hanneken Insurance Agency.

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